The largest rise in house prices for seven years and a surge in consumer confidence have added to a fast-improving US economic outlook, increasing the chances the Federal Reserve will slow its $85bn-a-month in asset purchases.

House prices jumped 10.9 per cent in March from last year’s levels, the biggest increase since the height of the housing boom in 2006, according to the S&P/Case-Shiller index. The rise in prices for homes and other assets helped push the Conference Board’s index of consumer confidence to its strongest level for five years.

The data add to growing evidence that the Fed’s ultra-low interest rates are helping the US economy through a soft patch caused by tighter fiscal policy and setting the stage for strong growth in 2014.